1. Mr. Jerry is working on the evaluation of a new project for his company. In year 3 of his evaluation, he estimates that sales and cost of sold would be $5.8 million and $3.48 million, respectively. The cost of the machine is $1 million, and it would depreciate using the straight line method for a useful life of 5 years. The corporate tax rate is 35 percent. Moreover, he expects an increase in working capital from $210,000 in year 2 to $305,000 in year 3. What are the pro forma earnings and cash flows for year 3?(5 Marks)
2. Mr. Neale is planning to upgrade to better production equipment for his firm. This will help him to make more of his product in the same amount of time. Thus, he forecasts that total sales will increase next year by 18% over the current amount of 110,000 units. If the selling price is $21 per unit, what are the incremental revenues next year from this upgrade? (5 Marks)
3. Suppose Intel stock has a beta of 1.6, whereas Boeing stock has a beta of 1. If the risk-free interest rate is 4% and the expected return of the market portfolio is 10%, according to the CAPM,
4. What is the expected return of Intel stock?
5. What is the expected return of Boeing stock?
6. What is the beta of a portfolio that consists of 60% Intel stock and 40% Boeing stock?
7. What is the expected return of a portfolio that consists of 60% Intel stock and 40% Boeing stock? (Show both ways to solve this.) (6 Marks)

*PLS SHOW FULL WORKING TQ